What is the goal of scientific research?

All animals strive for survival and reproduction. In economic terms, all animals, including human beings, strive for positive returns. Similarly, all businesses strive for positive returns. However, in scientific research, or academic research, we rarely mention returns. Instead, we proclaim to seek truth. Is it true? We will look into an example in some detail.

One of the popular application from natural science to social science is chaos theory. From chaos theory, there comes the butterfly effect. It is said that when a butterfly flips its wings in Brazil, it could generate a storm in the United States. Is it true? Definitely not! The air movement generated by the butterfly is quickly dissipated, not amplified. This is a basic property of any thermodynamic systems. This is also why weather can be forecast with reasonable degree of accuracy.

If there is no butterfly effect in real weather, how the theory of butterfly effect was developed? In earlier days, researchers could not solve the thermodynamic equations that represent weather phenomena. Edward Lorenz, a meteorologist, modified the original thermodynamic equations, which are partial differential equations, into simpler ordinary differential equations. For these simplified equations, small changes in initial conditions could lead to big changes in solutions. This is the so called butterfly effects. The theory is called chaos theory. This type of work was used to explain the difficulty of weather forecasting in early days. With the improvement of mathematical methods and computing power over time, meteorologist can now forecast weather with the original equations at much higher accuracy than the traditional methods based on personal experiences. 

In atmospheric science, people don’t really use the flip of butterfly in Brazil to explain a thunderstorm in Miami. However, the term butterfly effect has become very popular in social theories. It is often invoked to explain catastrophic events, such as financial crisis.

Take the 2007, 2008 financial crisis for example. It is often attributed to butterfly effect or black swan, something that outside human control. However, it is the consequence of many long term policies and activities. First, legislations set up pension systems. They force employers and employees to fork large amount of money into pension systems. This greatly weakens real economy and strengthens financial economy. The pension systems put on great burdens on most businesses and individuals. At the same time, they create huge demand for financial securities and generates great amount of wealth for financial industry. Second, Federal Reverse kept the interest rate low for a long time to encourage borrowing. Third, banks originated many innovative mortgages, such as adjustable rate mortgages, which generate high incomes for themselves but are destined to default when the mortgage rate become adjusted, usually after five years . Fourth, the market of mortgage backed securities transfer credit risk from informed insiders to uninformed outsiders. Fifth, credit rating agencies certify low quality mortgage bonds as AAA bonds to increase their value and marketability. Sixth, when large scale defaults occur or are going to occur, regulatory authorities step in to bail them out. In 1998, when Long Term Capital Management, a hedge fund, was going to default on its contracts, Federal Reserve organized a rescue to unwind its positions smoothly. The help of the regulatory system encouraged financial institutions to engage in ever more leveraged positions.  The purpose of these and other activities is not to generate a financial crisis. It is to transfer wealth from the whole society to the financial elites and download the risk from the best informed to the least informed. In 2006, one year before Lehman Brothers fail, it generated highest profit in its history. But the coordinated effort to make highest profit for the financial elites increases the leverage of the financial systems. This makes the human society very unstable. 

It takes many coordinated efforts to increase the leverage of financial systems to high levels. Financial crises are not caused by butterfly effect. The theory of butterfly effect becomes popular because it helps cover up the impacts of many policies by attributing their catastrophic consequences to random events. Similarly, neoclassical economic theory becomes popular in social theory not because it helps uncover truth, but because it helps cover up truth.

When we discuss rival theories, we have no problem to acknowledge that they are propagandas, they are used to cover up truth instead of uncover truth. We readily acknowledge Marxist economic theory taught in communist countries as propagandas. But we generally regard neoclassical economic theory taught in western countries as largely truth. However, in whatever social systems, researchers strive for gains in incomes and social standings, not for truth. This, of course, is what we should expect. Scientists, like lawyers or politicians, are ways to make a living. Scientists, like lawyers or politicians, are part of human beings, which in turn, are part of animals. Like all other animals, we seek positive return instead of truth. We seek truth only when truth happens to be aligned with our interest.

Are there any researchers striving for truth? There are few. In any social system, those few who strive for truth are sidelined. They are also despised by the public for being abject failures. Not every animal turns out to be successful. Not every scientist turns out to be successful. Those who seek truth against profit in science will be mercilessly crushed.